Why compact SUVs will play big in Beijing

SHANGHAI -- Ten years ago, the average Chinese family could not afford a car. Today, not only can they afford it, but they're also getting picky about which vehicle to buy.

SUVs, with their high seating position and a wide view of the road, have won the hearts of Chinese consumers. Within this segment, compact models are the big sellers because they are less expensive and easier to maneuver on congested urban streets.

The three top-selling models in the segment -- the Great Wall Haval H6, Volkswagen Tiguan and Honda CR-V -- are compact SUVs. In fact, nine of the 10 top-selling SUVs last year were compacts.

China's annual light-vehicle sales are growing 10 to 15 percent a year, down from above 30 percent in 2009 and 2010. Yet, SUV sales continue to soar more than 40 percent each year.

Automakers want to make hay while the sun shines. When the Beijing auto show opens April 20, visitors will see an array of compact SUVs.

Three international players have announced plans to unveil new models in Beijing. General Motors will launch the Chevrolet Trax, Lexus will introduce the NX and Honda will unveil an as-yet unnamed compact SUV.

Peugeot, Citroen, Skoda, Land Rover and Jeep also are expected to showcase compact SUVs.

Someday this segment will be oversaturated, but it hasn't happened yet. Last year, Ford Motor Co.'s China sales surged 49 percent to 936,000 units. Two locally built SUVs, the Ford Kuga and EcoSport, generated 17 percent of those sales.

For global automakers, compact SUVs are moneymakers. For domestic Chinese brands, the segment could mean survival.

Domestic automakers are quickly losing market share to foreign manufacturers. Unable to wage a frontal counterattack in China's huge compact sedan market -- where much of the losses have occurred -- domestic automakers are trimming sedan production in order to shift more resources into compact SUVs.

Indeed, for the Beijing show, Chinese media are reporting that nearly every domestic company will show a new SUV.